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REPORT

ON

ENERGY COST REDUCTION WITH ENERGY

EFFI.IENT MR

(ALWAR OIL MILL CLUSTER)

Bureau of Energy Efficiency (BEE)

Prepared By Reviewed By

DETAILED PROJECT REPORT ON

ENERGY EFFICIENT MOTOR FOR EXPELLER (50 HP)

(ALWAR OIL MILL CLUSTER)

ENERGY EFFICIENT MOTOR FOR EXPELLER (50 HP)

ALWAR OIL MILL CLUSTER

BEE, 2010

Detailed Project Report on Energy Efficient Motor for Expeller

(50 HP)

Oil Mill SME Cluster, Alwar (Rajasthan) (India) New Delhi: Bureau of Energy Efficiency;

Detail Project Report No.:

For more information

Bureau of Energy Efficiency (BEE)

(Ministry of Power, Government of India)

4th Floor, Sewa Bhawan

R. K. Puram, New Delhi – 110066

Telephone +91-11-26179699

Fax+91-11-26178352

Websites: www.bee-india.nic.in

Email: [email protected]/ [email protected]

http://www.bee-india.nic.in/

mailto:[email protected]/

mailto:[email protected]

Acknowledgement

We are sincerely thankful to the Bureau of Energy Efficiency, Ministry of Power, for giving us

the opportunity to implement the „BEE SME Project in “Alwar Oil Mill Cluster, Alwar”. We

express our sincere gratitude to all concerned officials for their support and guidance during

the conduct of this exercise.

Dr. Ajay Mathur, Director General, BEE

Smt. Abha Shukla, Secretary, BEE

Shri Jitendra Sood, Energy Economist, BEE

Shri Pawan Kumar Tiwari, Advisor (SME), BEE

Shri Rajeev Yadav, Project Economist, BEE

CII – AVANTHA Centre for Competitiveness for SMEs, Confederation of Indian Industry (CII)

is also thankful to Industry Associations for their valuable inputs, cooperation, support and

facilitating the implementation of BEE SME program in Alwar Oil Mill Cluster.

We take this opportunity to express our appreciation for the excellent support provided by

Foundry Unit Owners, Local Service Providers, and Equipment Suppliers for their active

involvement and their valuable inputs in making the program successful and in completion of

the Detailed Project Report (DPR).

CII – AVANTHA Centre for Competitiveness for SMEs, Confederation of Indian Industry (CII)

is also thankful to all the SME owners, plant in charges and all workers of the SME units for

their support during the energy use and technology audit studies and in implementation of the

project objectives.

CII – AVANTHA Centre for Competitiveness for SMEs Confederation of Indian Industry

Chandigarh

Contents List of Annexure vii

List of Tables vii

List of Figures viii

List of Abbreviation viii

Executive summary ix

About BEE’S SME program xi

1 INTRODUCTION ........................................................................................................1

1.1 Brief Introduction about cluster ...................................................................................1

1.1.1 Production process .....................................................................................................2

1.2 Energy performance in existing situation ....................................................................4

1.2.1 Average production by a typical unit ...........................................................................4

1.2.2 Energy consumption ...................................................................................................4

1.2.3 Specific Energy Consumption .....................................................................................4

1.3 Existing technology/equipment ...................................................................................4

1.3.1 Description of existing technology ...............................................................................4

1.3.2 Its role in the whole process .......................................................................................5

1.4 Establishing the baseline for the equipment ................................................................5

1.4.1 Design and operating parameters ...............................................................................5

1.4.2 Operating efficiency of the existing motor ...................................................................5

1.5 Barriers for adoption of new and energy efficient technology / equipment ...................5

1.5.1 Technological Barriers ................................................................................................5

1.5.2 Financial Barrier ..........................................................................................................6

1.5.3 Skilled manpower .......................................................................................................6

1.5.4 Other barrier(s) ...........................................................................................................6

2. TECHNOLOGY/EQUIPMENT FOR ENERGY EFFICIENCY IMPROVEMENTS .........7

2.1 Detailed description of technology/equipment selected ...............................................7

2.1.1 Description of equipment ............................................................................................7

2.1.2 Technology /Equipment specifications ........................................................................7

2.1.3 Justification of the technology selected & Suitability ...................................................8

2.1.4 Superiority over existing technology/equipment ..........................................................9

2.1.5 Availability of the proposed technology/equipment ......................................................9

2.1.6 Source of technology/equipment for the project .......................................................... 10

2.1.7 Service/technology providers .................................................................................... 10

2.1.8 Terms of sales .......................................................................................................... 10

2.1.9 Process down time during implementation ................................................................ 10

2.2 Life cycle assessment and risks analysis .................................................................. 10

2.3 Suitable unit/plant size in terms of capacity/production ............................................. 10

3. ECONOMIC BENEFITS OF NEW ENERGY EFFICIENT TECHNOLOGY ................ 11

3.1 Technical benefits ..................................................................................................... 11

3.1.1 Fuel savings per year................................................................................................ 11

3.1.2 Electricity savings per year ....................................................................................... 11

3.1.3 Improvement in product quality ................................................................................. 11

3.1.4 Increase in production............................................................................................... 11

3.1.5 Reduction in raw material consumption .................................................................... 11

3.1.6 Reduction in other losses .......................................................................................... 11

3.2 Monetary benefits ..................................................................................................... 11

3.3 Social benefits .......................................................................................................... 11

3.3.1 Improvement in working environment in the plant ..................................................... 11

3.3.2 Improvement in skill set of workers ........................................................................... 11

3.4 Environmental benefits ............................................................................................. 12

3.4.1 Reduction in effluent generation ............................................................................... 12

3.4.2 Reduction in GHG emission such as CO2, NOx, etc ................................................. 12

3.4.3 Reduction in other emissions like SOx ...................................................................... 12

4. INSTALLATION OF NEW ENERGY EFFICIENT MOTOR ........................................ 13

4.1 Cost of technology/equipment implementation .......................................................... 13

4.1.1 Cost of technology/equipments ................................................................................. 13

4.1.2 Other costs ............................................................................................................... 13

4.2 Arrangement of funds ............................................................................................... 13

4.2.1 Entrepreneur‟s contribution ....................................................................................... 13

4.2.2 Loan amount ............................................................................................................. 13

4.2.3 Terms & conditions of loan ....................................................................................... 13

4.3 Financial indicators ................................................................................................... 13

4.3.1 Cash flow analysis .................................................................................................... 13

4.3.2 Simple payback period .............................................................................................. 14

4.3.3 Net Present Value (NPV) .......................................................................................... 14

4.3.4 Internal rate of return (IRR) ....................................................................................... 14

4.3.5 Return on investment (ROI) ...................................................................................... 14

4.4 Sensitivity analysis in realistic, pessimistic and optimistic scenarios ......................... 14

4.5 Procurement and implementation schedule .............................................................. 14

vii

List of Annexure

Annexure 1: Energy audit data used for baseline establishment ............................................ 15

Annexure 2: Detailed technology assessment report – EE Motor ........................................... 16

Annexure 3: Detailed financial calculations & analysis ........................................................... 17

Annexure 4: Details of procurement and implementation plan ................................................ 21

Annexure 6: Details of technology/equipment and service providers ...................................... 22

Annexure 7: Quotation or techno-commercial bid ................................................................... 23

List of Table

Table 1.1 production wise unit breakups ................................................................................... 2

Table 1.2 Product Manufactured ............................................................................................... 2

Table 1.3 Energy consumption .................................................................................................. 4

Table 1.4 Existing motor specifications...................................................................................... 5

Table 2.1: Energy Efficient motor Specifications ........................................................................ 8

Table 4.1: Project detail cost ................................................................................................... 13

Table 4.2: Sensitivity analysis ................................................................................................. 14

viii

List of Figure

Figure 1.1: General Process Flowchart of a Typical Oil Mill…………….……………………..3

Lists of Abbreviations

BEE - Bureau of Energy Efficiency

DPR - Detailed Project Report

DSCR - Debt Service Coverage Ratio

GHG - Green House Gases

HP - Horse Power

IRR - Internal Rate of Return

MSME - Micro Small and Medium Enterprises

MoP - Ministry of Power

NPV - Net Present Value

ROI - Return on Investment

MoMSME - Ministry of Micro Small and Medium Enterprises

SIDBI - Small Industrial Development Bank of India

ix

EXECUTIVE SUMMARY

Confederation of Indian Industry is executing BEE-SME program in Alwar Oil Mill Cluster,

supported by Bureau of Energy Efficiency (BEE) with an overall objective of improving the

energy efficiency in cluster units.

Alwar Oil Mill cluster is one of the largest Oil Mill clusters in India; accordingly this cluster was

chosen for energy efficiency improvements by implementing energy efficient measures /

technologies, so as to facilitate maximum replication in other Oil Mill clusters in India. The

main energy forms used in the cluster units are grid electricity. In Oil Mill plant, electricity bill is

almost 100% of total plant energy bill.

Most of the Industrial installations in the country have large electrical loads which are severely

inductive in nature, such as motors, large machines etc which results in a high power

consumption. This means loss and wastage of energy by electricity boards as well as for Oil

Mill units. This can be taken care by Energy Efficient Motors in place of Old / Re-winded

Motors.

In any oil mill, Kolhu and Expellers motors are the main energy consumers. During energy

audit, it was observed that the maximum of such motors are very old and re-winded more

than 5 times which leads to lower operating efficiency and higher power consumption.

Operating Efficiency of old motors is in the range of 70 - 85%.

Installation of new energy efficient motor of 50 HP capacity for existing expeller having

efficiency more than existing motor would lead to power saving upto 10199 kW per year due

to improve efficiency.

The DPR highlights the details of the study conducted for assessing the potential for reducing

electricity consumption in expeller machine by installing new efficient motor in various units of

the cluster, possible energy savings and its monetary benefit, availability of the

technologies/design, local service providers, technical features and proposed equipment

specifications, various barriers in implementation, environmental aspects, estimated GHG

reductions, capital cost, financial analysis, and schedule of project Implementation.

This bankable DPR also found eligible for subsidy scheme of MoMSME for “Technology and

Quality Upgradation Support to Micro, Small and Medium Enterprises” under “National

Manufacturing and Competitiveness Programme”. The key indicators of the DPR including the

Project cost, debt equity ratio, monetary benefit and other necessary parameters are given in

table below:

x

Sr. No. Particular Unit Value

1 Project cost (` in Lakh) 1.07

2 Electricity Savings kWh/annum 10199

3 Monetary benefit (` in Lakh) 0.49

4 Simple payback period Years 2.19

5 NPV (` in Lakh) 0.67

6 IRR %age 27.41

7 ROI %age 25.56

8 Average DSCR Ratio 1.76

9 CO2 emission reduction MT/year 8

10 Process down time Days 1

The projected profitability and cash flow statements indicate that the project

implementation i.e. installation of energy efficient motor will be financially viable and

technically feasible solution for the cluster.

xi

ABOUT BEE’S SME PROGRAM

Bureau of Energy Efficiency (BEE) is implementing a BEE-SME Programme to improve the

energy performance in 25 selected SMEs clusters. Alwar Oil Mill Cluster is one of them. The

BEE‟s SME Programme intends to enhance the energy efficiency awareness by

funding/subsidizing need based studies in SME clusters and giving energy conservation

recommendations. For addressing the specific problems of these SMEs and enhancing

energy efficiency in the clusters, BEE will be focusing on energy efficiency, energy

conservation and technology up-gradation through studies and pilot projects in these SMEs

clusters.

Major activities in the BEE -SME program are furnished below:

Activity 1: Energy use and technology audit

The energy use technology studies would provide information on technology status, best

operating practices, gaps in skills and knowledge on energy conservation opportunities,

energy saving potential and new energy efficient technologies, etc for each of the sub sector

in SMEs.

Activity 2: Capacity building of stake holders in cluster on energy efficiency

In most of the cases SME entrepreneurs are dependent on the locally available technologies,

service providers for various reasons. To address this issue BEE has also undertaken

capacity building of local service providers and entrepreneurs/ Managers of SMEs on energy

efficiency improvement in their units as well as clusters. The local service providers will be

trained in order to be able to provide the local services in setting up of energy efficiency

projects in the clusters

Activity 3: Implementation of energy efficiency measures

To implement the technology up-gradation project in the clusters, BEE has proposed to

prepare the technology based detailed project reports (DPRs) for a minimum of five

technologies in three capacities for each technology.

Activity 4: Facilitation of innovative financing mechanisms for implementation of

energy efficiency projects

The objective of this activity is to facilitate the uptake of energy efficiency measures through

innovative financing mechanisms without creating market distortion.

Energy Efficient Motor for Expeller-50 HP

1

1 INTRODUCTION

1.1 Brief Introduction about cluster

Alwar SME Cluster is one of the largest Oil Mill clusters in India, which is famous for

manufacturing of Mustard Oil. The nearest airport is at Jaipur, which is 150 KM from Alwar

by road.

There are approximately 60 Oil Mill units in this cluster which are engaged in

manufacturing of mustard oil (kacchi Ghani and Pakki Ghani). There are more Oil Mill units

coming up in Alwar.

Energy used for oil extraction is electricity. In Alwar and Sawaimadhopur region there is

shortage of power and that leads to less production of oil. Because of the power shortage

some of the very small scale units of cluster are planning to shut their plant.

Electrical energy consumption in Alwar and Sawaimadhopur units lies in range of around

186 Lakhs kWh for processing of 1240000 Quintal of Mustard Seed. Oil units in Alwar &

Sawaimadhopur regions are having Specific Energy Consumption in range of 10-15

kWh/Quintal of mustard seed processed.

Energy Usage Pattern

Average monthly electricity consumption in Oil Mill plants ranges from 0.5 lakh to 2 lakh

kWh depending on the size of the plant.


2

Classification of Units

The Oil Mill units can be categorized into following three types based on capacity of

production

Large scale units

Medium scale units

Small scale units

Production Wise Unit Breakup

Alwar Oil Mill cluster can be broken into three categories viz. small, medium and large

size unit. Table 1.1 shows that production wise breakup of Alwar cluster.

Table 1.1 production wise unit breakups

S. No. Type of Unit Production Capacity

1 Large scale unit More than 120 MT

2 Medium scale unit 50 to 120MT

3 Small scale unit Less than 50 MT

Products Manufactured Different types of products manufactured in Alwar SME cluster are as shown in Table 1.2

below.

Table 1.2 Product Manufactured

S. No Type of Product % Share

1 Pakki Ghani 70

2 Kacchi Ghani 30

1.1.1 Production process

Mustard Oil Extraction

Raw material used for oil production is mustard seeds, which is purchased from Local

Mandi of Alwar and Sawaimadhopur.

Seed cracker cracks the crop of mustard in fine pieces so that it can be further

processed in Kolhu and Expeller. To get oil from raw mustard seed, it is first given to


3

Cracker Mustard Seed

feeding

Kolhu Division

Double pass

expeller

Kacchi ghani

oil

Oil Cake

feeeding

Single pass

expeller

Pakki

Ghani (Oil)

Oil cake to solvent

extraction plant

Or

Selled out

Filters

Packing

Filters

Packing

Kolhu and the waste (oil cake) from the kolhu is given to Expeller which extracts more oil

from the same oil cake. Remaining oil cake is given to solvent extraction plant or sold out

in market. Filtered oil goes to oil filling plant where oil is filled in bottles as per

requirement and finally packed in cartoon to send at required places across India.

Technology used for process involve expellers (Double pass & Single pass), Kolhus run

by motors instead of any animal. Single motors run many kolhus, which are connected

on same shaft by belts. After extracting oil from machines, it is sent for filtration to fine

filter cloth

Detailed of process flow chart are finished in Figure 1.1 below:

Figure 1.1: General process flowchart of a typical Oil mill


4

1.2 Energy performance in existing situation

Oil units in Alwar & Sawaimadhopur regions are having Specific Energy Consumption in

range of 10-15 kWh/Quintal of mustard seed processed.

1.2.1 Average production by a typical unit

The average production in a typical Oil mill is between 122691 MT per annum.

1.2.2 Energy consumption

Energy consumption (electrical) in a typical Oil Mill plant for different types of products is

given in Table 1.3 below:

Table 1.3 Energy consumption

S. No Type of Fuel Unit Value Contribution in equivalent energy terms (%)

1 Electricity MWh/year 18.6 100

1.2.3 Specific Energy Consumption

Specific electrical energy consumption is 10 to 15 kWh for quintal of mustard seed

processing in Oil Mill industry

1.3 Existing technology/equipment

1.3.1 Description of existing technology

Kolhu and Expellers are the main energy consumers in any oil mill. Induction motors in


5

the range of 40 – 60 hp are the prime movers for Expellers & Kolhus. It was observed

that the maximum of motors are re-winded more than 5 times which leads to higher

power consumption and lower operating efficiency. Also old en-efficient motors in the

efficiency range of 70 - 85% are in use.

A detail of existing compressor motor is given in the Table 1.3 below:

Table 1.4 Existing motor specifications

S.No Details Expeller motor

1 Rated HP 50

2 Rated Amps 63

3 Frequency 50 Hz

4 Power Consumption (kW) 56

5 RPM 1470

1.3.2 Its role in the whole process

Expeller is used to extracts more oil from the same oil cake which comes from kolhu

machine.

1.4 Establishing the baseline for the equipment

1.4.1 Design and operating parameters

Presently all the Oil Mill plants at Alwar are operating with very old and inefficient motors.

The present power consumption of a motor is 37 kW. The motor is operated continuously

for 10 hours in a day and for 300 days in a year.

1.4.2 Operating efficiency of the existing motor

The detailed energy audit studies had been undertaken in various units of the cluster to

evaluate the motor efficiencies. Based on the age and number of the times motor is re

winded, the efficiency of the motor is found about 85%, against 93.6% efficiency of energy

efficient motor available in the market.

1.5 Barriers for adoption of new and energy efficient technology / equipment

1.5.1 Technological Barriers

The major technical barriers that prevented the implementation of the energy efficient

motors in the cluster are:


6

Lack of awareness and information of the loss in terms of efficiency for re-

winded and energy efficient motors

Due to lack of technical knowledge and expertise, re-winded motors are used

in the Oil Mill plants.

In this cluster, like many others, there is lack of leadership to take up the

energy efficiency projects in the plant.

1.5.2 Financial Barrier

Implementation of the proposed project activity requires an investment of ` 1.07

Lakh/motor. Each unit is having around 4 - 20 motors. This is a significant investment

and not commonly seen in the cluster for the implementation of energy efficiency

projects.

Energy Efficiency Financing Schemes such as SIDBI‟s, if focused on the cluster, will play

a catalytic role in implementation of identified energy conservation projects & technologies.

The cluster has significant potential for implementing energy efficiency motors.

1.5.3 Skilled manpower

In Alwar Oil Mill cluster, the availability of skilled manpower is one of the limitations, this

issue gets further aggravated due to more number of Oil Mill units as compared to the

availability of skilled manpower. One local technical person available at Alwar takes care

of about 2 to 3 Oil Mill units. For major equipments of Oil Mill units like Expeller or Kolhu

for maintenance or the repair works of these equipments take care by the equipment

suppliers itself.

1.5.4 Other barrier(s)

No other barriers


7

2. TECHNOLOGY/EQUIPMENT FOR ENERGY EFFICIENCY IMPROVEMENTS

2.1 Detailed description of technology/equipment selected

2.1.1 Description of equipment

Existing scenario of inefficient motors in plants of Alwar cluster is very poor. In almost all

of the units, re-winded/old in-efficient motors are being used. In these cluster units

various process working under different load condition so that it is not easier to maintain

proper condition of motors.

These motors can be replaced with Energy Efficient Motors which leads to higher

working efficiency of up to 5 - 10% for the same working condition. Energy-efficient

motors (EEM) are the ones in which, design improvements are incorporated specifically

to increase operating efficiency over motors of standard design. Design improvements

focus on reducing intrinsic motor losses. Improvements include the use of lower-loss

silicon steel, a longer core (to increase active material), thicker wires (to reduce

resistance), thinner laminations, smaller air gap between stator and rotor, copper

instead of aluminum bars in the rotor, superior bearings and a smaller fan, etc. Energy-

efficient motors now available in India operate with efficiencies that are typically 3 to 4

percentage points higher than standard motors. In keeping with the stipulations of the

BIS, energy-efficient motors are designed to operate without loss in efficiency at loads

between 75 % and 100 % of rated capacity. This may result in major benefits in varying

load applications. The power factor is about the same or may be higher than for

standard motors.

Advantage

Best performance even at partial loads:

In many applications the load factor of the motor will be range of 60% to 80%. The

efficiency curve of standard motor is dropping in nature i.e., there is a sharp fall in

efficiency at partial loads. But the energy efficient motors have a flat efficiency curve and

hence the fall in efficiency is marginal. Thus energy saving is significant even in part loads.

2.1.2 Technology /Equipment specifications

The detailed specification of the motor suggested is furnished in table 2.1 below:


8

Table 2.1: Energy Efficient motor Specifications

S. No. Parameter Unit Value

1 Rated Capacity HP 50

2 Rated Current Amps 63

3 Speed RPM 1470

4 Efficiency % age 93.6

5 Power Factor % age 0.87

Standard vs. High Efficiency Motors

Efficient motors have lower operating temperatures and noise levels, greater ability to

accelerate higher-inertia loads, and are less affected by supply voltage fluctuations.

2.1.3 Justification of the technology selected & Suitability

The expeller motors are one of the major energy consuming equipment in Oil Mill cluster

at Alwar. Based on the detailed energy audits conducted for various motors installed in

cluster units, the motors are age old and rewinded number of time which leads to


9

reduction in efficiency and high power consumption. But the new energy efficient motors

will have overall efficiency of 93.6% (at full load).

The following benefits are possible for selection of this technology

Energy efficient motors will reduce electricity consumption

It reduces the GHG emissions

Lower payback period for Continuous Operation

High power factor

Flat efficiency curve

Higher Motor life

2.1.4 Superiority over existing technology/equipment

The following are the superior features of energy efficient motors over existing motors

The efficiency curve is almost flat between 60 to 100 % load, resulting in higher

energy savings as in most of the cases the motor is not always fully loaded

The special design features also result in lower operating temperatures which

enhance the life of motor and reduce the maintenance costs.

These motors have inherently low noise and vibration and help in conservation

of environment.

These motors are with highest power factor in the industry due the special

exclusive design.

The higher power factor reduces the currents in the cables supplying power to

motor and this reduces cable loss,

Improving the system efficiency, sometimes this allows even a lower cable size

saving tremendously on capital costs.

Saving is also made by reducing capacitors required to improve power factor

2.1.5 Availability of the proposed technology/equipment

Now days when energy cost is high, it is poor practice to use re-winded motors. As far as

technology is concerned Energy efficient motors are available in local/ national market. It

is well proven technology which is adopted in many of the other similar and dissimilar

units. Local vendors can arrange energy efficient motors at order. Local service providers

are also available at Alwar. More details of service provider are given in annexure 5.


10

2.1.6 Source of technology/equipment for the project

The main source which has taken the initiative to create the awareness for implementation

of this project by providing the benefit to the consumers in terms of rupees is the State

Electricity Board. With use of energy efficient motors, State Electricity Distribution Board

will be able to deliver more power to other industry.

2.1.7 Service/technology providers

A detail of energy efficient motors suppliers has been furnished in Annexure 5.

2.1.8 Terms of sales

No any specific terms and conditions for sale of Energy efficient motor.

2.1.9 Process down time during implementation

Technology provider will bring the complete setup for the proposed project from their site

and make all the arrangements for implementation at the client‟s site. However, one day

would be required for process down time.

2.2 Life cycle assessment and risks analysis

The life of the energy efficient motor is considered at 10-15 years. There is no risk

involved as the motor are technology proven and are successfully in operation in other

industries of the country.

2.3 Suitable unit/plant size in terms of capacity/production

For estimation of the saving potential on implementation of this project, here the Oil Mill

plant engaged in producing mustard oil, having old and re-winded motors can be

considered.


11

3. ECONOMIC BENEFITS OF NEW ENERGY EFFICIENT TECHNOLOGY

3.1 Technical benefits

3.1.1 Fuel savings per year

No fuel saving is possible due to implementation of proposed system.

3.1.2 Electricity savings per year

The efficiency of the new energy efficiency motor is more than the existing motor which

will lead to reduction in electricity consumption. The power savings due to installation of

new energy efficient motor would be 10199 kW per annum. Details of electricity saving

calculation are given at Annexure 2.

3.1.3 Improvement in product quality

There is no significant impact on the product quality.

3.1.4 Increase in production

There is no significant effect on production capacity.

3.1.5 Reduction in raw material consumption

Raw material is consumption will be same.

3.1.6 Reduction in other losses

Due to improved power factor of new energy efficient motor, the distribution losses may

also reduce.

3.2 Monetary benefits

The monetary benefit due to installation of new energy efficient motor is ` 0.49 lakh per

annum due to reduction in electricity consumption. Details of monetary saving calculation

are furnished in Annexure 2.

3.3 Social benefits

3.3.1 Improvement in working environment in the plant

There is no significant impact of this project in the working environment in the plant.

3.3.2 Improvement in skill set of workers

The technology selected for the implementation is new and energy efficient motor will

create the awareness among the workforce on energy efficiency.


12

3.4 Environmental benefits

3.4.1 Reduction in effluent generation

None

3.4.2 Reduction in GHG emission such as CO2, NOx, etc

The major GHG emission reduction source is CO2. The technology will reduce grid

electricity consumption and emission reductions are estimated at 8 tons of CO2 per annum

due to implementation of the project activity.

3.4.3 Reduction in other emissions like SOx

No significant impact on SOx emissions.


13

4. INSTALLATION OF NEW ENERGY EFFICIENT MOTOR

4.1 Cost of technology/equipment implementation

4.1.1 Cost of technology/equipments

The total cost for motor is estimated at ` 0.98 lakh, which includes motor cost and other

charges and discounts as per the Quotation in Annexure 7.

4.1.2 Other costs

Other charges include taxes and cabling and panel modification. Project cost details are

furnished in Table 4.1 below:

Table 4.1: Project detail cost

Sr. No. Particular Unit Value

1 New Energy Efficient motor ` in lakh 0.98

2 Applicable taxes ` in lakh 0.039

3 Panel, Switch & Cabling, Elec. and Modifications etc. ` in lakh 0.05

4 Total Investment ` in lakh 1.07

4.2 Arrangement of funds

4.2.1 Entrepreneur’s contribution

The entrepreneur‟s contribution is 25% of total project cost, which works out at ` 0.27 lakh.

4.2.2 Loan amount

The term loan is 75% of the total project, which is ` 0.80 lakh.

4.2.3 Terms & conditions of loan

The interest rate is considered at 10.0% which is normal interest rate for energy efficiency

related projects. The loan tenure is 5 years and the moratorium period is 6 months.

4.3 Financial indicators

4.3.1 Cash flow analysis

Considering the above discussed assumptions, the net cash accruals starting with ` 0.32

lakh in the first year operation and increases to ` 1.41 at the end of eighth year.


14

4.3.2 Simple payback period

The total project cost of the proposed technology is ` 1.07 lakh and monetary savings due

to reduction in electricity consumption is ` 0.49 lakh and the simple payback period works

out to be 2.19 years.

4.3.3 Net Present Value (NPV)

The Net present value of the investment at 10.0% interest rate works out to be ` 0.67 lakh.

4.3.4 Internal rate of return (IRR)

The after tax Internal Rate of Return of the project works out to be 27.41%.

4.3.5 Return on investment (ROI)

The average return on investment of the project activity works out at 25.56%. The average

DSCR is 1.76.

4.4 Sensitivity analysis in realistic, pessimistic and optimistic scenarios

A sensitivity analysis has been worked out to ascertain how the project financials would

behave in different situations like there is an increase in power savings or decrease. For

the purpose of sensitive analysis, two scenarios are considered are.

Increase in power savings by 5%

Decrease in power savings by 5%

In each scenario, other inputs are assumed as constant. The financial indicators in each of

the above situation are indicated along with standard indicators.

Table 4.2: Sensitivity analysis

Particulars IRR NPV ROI DSCR

Normal 27.41% 0.67 25.56% 1.76

5% increase in power savings 29.68% 0.76 25.84% 1.86

5% decrease in power savings 25.12% 0.58 25.25% 1.67

4.5 Procurement and implementation schedule

The project is expected to be completed in 7 weeks from the date of release of purchase

order. The detailed schedule of project implementation is furnished in Annexure 5.


15

ANNEXURE

Annexure 1: Energy audit data used for baseline establishment

S. No. Particular Unit Value

1 Expeller motor capacity hp 50

2 Actual power consumption kW 37

3 Number of passes Nos Single / double

4 Total length Inches 33-66

5 Oil extraction ( first pass ) % 20

6 Oil extraction ( first pass ) % 2.5

7 Oil extraction ( first pass ) % 1.5

8 Oil extraction ( first pass ) % 1

9 Feed- mustard seed Kg/hr 1600

10 Oil cake formation Kg/hr 1250

11 Oil percent in cake % 7.5


16

Annexure 2: Detailed technology assessment report – EE Motor

S.No Particulars Unit Value

1 Present rated HP HP 50

2 Power consumption in base case scenario kW 37

3 Efficiency of existing motor % age 85

4 Efficiency of energy efficient motor % age 93.6

5 Proposed power consumption kWh 33.60

6 Power savings kW 3.40

7 Total operating hours hrs 10

8 Total operating days days 300

9 Power savings per annum kWh 10199

10 Monetary savings per annum (@ `.4.80 per kWh) ` in lakh 0.49

11 Investment required for new energy efficient motor ` in lakh 1.07

12 Payback period Years 2.19


17

Annexure 3: Detailed financial calculations & analysis

Assumptions

Name of the Technology Energy Efficient Electric Motor

Rated Capacity 50 HP

Details Unit Value Basis

Installed Capacity HP 50

No of working days Days 300

No of operating hours Hrs 10

Proposed Investment

Plant & Machinery ` (in lakh) 0.98

Applicable taxes ` (in lakh) 0.04

Panel, Switch & Cabling etc. ` (in lakh) 0.05

Total Investment ` (in lakh) 1.07

Financing pattern

Own Funds (Equity) ` (in lakh) 0.27 Feasibility Study

Loan Funds (Term Loan) ` (in lakh) 0.80 Feasibility Study

Loan Tenure Years 5.00 Assumed

Moratorium Period Months 6.00 Assumed

Repayment Period Months 66.00 Assumed

Interest Rate %age 10.00% SIDBI Lending rate

Estimation of Costs

O & M Costs % on Plant & Equip 5.00 Feasibility Study

Annual Escalation %age 5.00 Feasibility Study

Estimation of Revenue

Electricity Saving kWh/Year 10199

Cost of electricity `/kWh 4.8

St. line Depn. %age 5.28 Indian Companies Act

IT Depreciation %age 80.00 Income Tax Rules

Income Tax %age 33.99 Income Tax

Estimation of Interest on Term Loan ` (in lakh)

Years Opening Balance Repayment Closing Balance Interest

1 0.80 0.02 0.78 0.09

2 0.78 0.10 0.68 0.07

3 0.68 0.12 0.56 0.06

4 0.56 0.12 0.44 0.05

5 0.44 0.26 0.18 0.03

6 0.18 0.18 0.00 0.01

1.41


18

WDV Depreciation ` (in lakh)

Particulars / years 1 2

Plant and Machinery

Cost 1.07 0.21

Depreciation 0.86 0.17

WDV 0.21 0.04

Projected Profitability ` (in lakh)

Particulars / Years 1 2 3 4 5 6 7 8

Fuel savings 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49

Total Revenue (A) 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49

Expenses

O & M Expenses 0.05 0.06 0.06 0.06 0.07 0.07 0.07 0.08

Total Expenses (B) 0.05 0.06 0.06 0.06 0.07 0.07 0.07 0.08

PBDIT (A)-(B) 0.44 0.43 0.43 0.43 0.42 0.42 0.42 0.41

Interest 0.09 0.07 0.06 0.05 0.03 0.01 0.00 0.00

PBDT 0.34 0.36 0.37 0.38 0.39 0.42 0.42 0.41

Depreciation 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06

PBT 0.29 0.30 0.31 0.32 0.33 0.36 0.36 0.36

Income tax 0.00 0.06 0.13 0.13 0.13 0.14 0.14 0.14

Profit after tax (PAT) 0.29 0.24 0.19 0.19 0.20 0.22 0.22 0.22

Computation of Tax ` (in lakh)


Profit before tax 0.29 0.30 0.31 0.32 0.33 0.36 0.36 0.36

Add: Book depreciation 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06

Less: WDV depreciation 0.86 0.17 - - - - - -

Taxable profit (0.52) 0.19 0.37 0.38 0.39 0.42 0.42 0.41

Income Tax - 0.06 0.13 0.13 0.13 0.14 0.14 0.14

Projected Balance Sheet ` (in lakh)


Liabilities

Share Capital (D) 0.27 0.27 0.27 0.27 0.27 0.27 0.27 0.27

Reserves & Surplus (E) 0.29 0.52 0.71 0.90 1.10 1.32 1.54 1.76

Term Loans (F) 0.78 0.68 0.56 0.44 0.18 0.00 0.00 0.00

Total Liabilities (D)+(E)+(F) 1.33 1.47 1.54 1.61 1.55 1.59 1.81 2.03

Assets 1 2 3 4 5 6 7 8

Gross Fixed Assets 1.07 1.07 1.07 1.07 1.07 1.07 1.07 1.07

Less Accm. Depreciation 0.06 0.11 0.17 0.23 0.28 0.34 0.40 0.45

Net Fixed Assets 1.02 0.96 0.90 0.85 0.79 0.73 0.68 0.62

Cash & Bank Balance 0.32 0.51 0.64 0.77 0.76 0.86 1.13 1.41

TOTAL ASSETS 1.33 1.47 1.54 1.61 1.55 1.59 1.81 2.03

Net Worth 0.55 0.79 0.98 1.17 1.37 1.59 1.81 2.03

Debt Equity Ratio 2.91 2.54 2.09 1.64 0.67 0.00 0.00 0.00


19

Projected Cash Flow ` (in lakh)

Particulars / Years 0 1 2 3 4 5 6 7 8

Sources

Share Capital 0.27 - - - - - - - -

Term Loan 0.80

Profit After tax 0.29 0.24 0.19 0.19 0.20 0.22 0.22 0.22

Depreciation 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06

Total Sources 1.07 0.34 0.30 0.24 0.25 0.26 0.27 0.28 0.27

Application

Capital Expenditure 1.07

Repayment Of Loan - 0.02 0.10 0.12 0.12 0.26 0.18 0.00 0.00

Total Application 1.07 0.02 0.10 0.12 0.12 0.26 0.18 0.00 0.00

Net Surplus - 0.32 0.20 0.12 0.13 0.00 0.09 0.28 0.27

Add: Opening Balance - - 0.32 0.51 0.64 0.77 0.76 0.86 1.13

Closing Balance - 0.32 0.51 0.64 0.77 0.76 0.86 1.13 1.41

IRR ` (in lakh)

Particulars / months 0 1 2 3 4 5 6 7 8

Profit after Tax 0.29 0.24 0.19 0.19 0.20 0.22 0.22 0.22

Depreciation 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06

Interest on Term Loan 0.09 0.07 0.06 0.05 0.03 0.01 - -

Cash outflow (1.07) - - - - - - - -

Net Cash flow (1.07) 0.44 0.37 0.31 0.30 0.29 0.28 0.28 0.27

IRR 27.41%% NPV 0.67

Break Even Point ` (in lakh)


Variable Expenses

Oper. & Maintenance Exp (75%) 0.04 0.04 0.04 0.05 0.05 0.05 0.05 0.06

Sub Total(G) 0.04 0.04 0.04 0.05 0.05 0.05 0.05 0.06

Fixed Expenses

Oper. & Maintenance Exp (25%) 0.01 0.01 0.01 0.02 0.02 0.02 0.02 0.02

Interest on Term Loan 0.09 0.07 0.06 0.05 0.03 0.01 0.00 0.00

Depreciation (H) 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06

Sub Total (I) 0.16 0.14 0.13 0.12 0.11 0.08 0.07 0.08

Sales (J) 0.49 0.49 0.49 0.49 0.49 0.49 0.49 0.49

Contribution (K) 0.45 0.45 0.45 0.44 0.44 0.44 0.44 0.43

Break Even Point (L= G/I) 36.44% 32.40% 30.11% 27.72% 24.08% 18.05% 17.13% 17.45%

Cash Break Even {(I)-(H)} 23.83% 19.74% 17.39% 14.93% 11.22% 5.12% 4.13% 4.36%

Break Even Sales (J)*(L) 0.18 0.16 0.15 0.14 0.12 0.09 0.08 0.09


20

Return on Investment ` (in lakh)

Particulars / Years 1 2 3 4 5 6 7 8 Total

Net Profit Before Taxes 0.29 0.30 0.31 0.32 0.33 0.36 0.36 0.36 2.63

Net Worth 0.55 0.79 0.98 1.17 1.37 1.59 1.81 2.03 10.29

25.56%

Debt Service Coverage Ratio ` (in lakh)

Particulars / Years 1 2 3 4 5 6 7 8 Total

Cash Inflow

Profit after Tax 0.29 0.24 0.19 0.19 0.20 0.22 0.22 0.22 1.32

Depreciation 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.34

Interest on Term Loan 0.09 0.07 0.06 0.05 0.03 0.01 0.00 0.00 0.32

Total (M) 0.44 0.37 0.31 0.30 0.29 0.28 0.28 0.27 1.98

DEBT

Interest on Term Loan 0.09 0.07 0.06 0.05 0.03 0.01 0.00 0.00 0.32

Repayment of Term Loan 0.02 0.10 0.12 0.12 0.26 0.18 0.00 0.00 0.80

Total (N) 0.12 0.17 0.18 0.17 0.29 0.19 0.00 0.00 1.12

3.71 2.12 1.67 1.75 0.99 1.51 0.00 0.00 1.76

Average DSCR (M/N) 1.76


21

Annexure 4: Details of procurement and implementation plan

Project Implementation schedule

S. No

Activity Weeks

1 2 3 4

1 Placement of Orders for Equipment

2 Supply of motor

3 Installation of the motor

4 Trial runs

The process down time is considered for only one day.


22

Annexure 6: Details of technology/equipment and service providers

Equipment details Source of technology Service/technology providers

1. Energy Efficient Motors Bharat Bijlee Ltd

Mr. Rakesh Verma Sr. Manager – Marketing

[email protected] 09871861872

2. Energy Efficient Motors ABB Ltd

Mr. Neeraj Verma ABB Ltd

Power Product SCO-13-14-15 Sector-34A Chandigarh Phone: 0172-4321845 Telefax: 0172-

2601618 Mobile: 09878613484 email: [email protected]

3.Energy Efficient Motors Kirloskar Brothers Ltd Mr. Kamlesh Gupta Station Road Alwar Tel.: +91

(144) 2700226 Mob. : +91 9414019126/ 09414019126


23

Annexure 7: Quotation or techno-commercial bid

On the list price offer discount of 55 % + ED + Vat for retail customer. For enquiries of motors more than 5 prices are negotiable.

Bureau of Energy Efficiency (BEE) (Ministry of Power, Government of India) 4th Floor, Sewa Bhawan, R. K. Puram, New Delhi – 110066 Ph.: +91 – 11 – 26179699 (5 Lines), Fax: +91 – 11 – 26178352

Websites: www.bee-india.nic.in, www.energymanagertraining.com

India SME Technology Services Ltd

DFC Building, Plot No.37-38, D-Block, Pankha Road, Institutional Area, Janakpuri, New Delhi-110058 Tel: +91-11-28525534, Fax: +91-11-28525535 Website: www.techsmall.com

Confederation of Indian Industry

CII – AVANTHA Centre for Competitiveness Block No.3, Dakshin Marg Sector 31-A, Chandigarh - 160030 Tel: 0172-5080784 (D) / 2666517-19 Fax: 0172-2606259 / 2614974 E-mail: [email protected] Website: www.ciicfc.org

http://www.bee-india.nic.in/

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